Serious Business Fraud: High Cost Of Anti-commercial Fraud

In the past three years, four out of every five companies in the world have become victims of commercial fraud (80%), while large companies with revenues of more than $5 billion have suffered an average loss of more than $20 million due to commercial fraud. 10% of companies lose more than $100 million.

Due to the lack of uniform statistical standards, China does not have a very accurate authoritative data on the amount of corporate fraud in the country. "From the current situation in China, the situation is indeed very serious. Anti-commercial fraud work has not yet been managed by a corresponding institution in China. There is still a lot of work to be done in anti-commercial fraud." The Office of the State Council has reorganized and regulated the market economic order. Professor Wang Weiguo of the Civil and Commercial Economic Law School of China University of Political Science and Law, which is responsible for the research on anti-commercial fraud, is under the National Regulation Office.

According to the situation already announced by the National Office of Regulation, economically developed provinces and cities such as Beijing, Guangdong and Shanghai have become high-risk areas for commercial fraud. According to Yao Guanghai, deputy secretary-general of the National Regulation Office, as of the end of last year, the China Anti-Commercial Fraud Network hosted by the National Office of Regulations received 1,514 online complaints, including 461 in Beijing, accounting for 30.45% of valid complaints; Shanghai 72 Pieces, accounting for 4.76%. There are relatively few commercial fraud complaints in Gansu, Qinghai and Ningxia. Fraud in the field of intellectual property is mostly in the electronics, pharmaceutical and financial sectors.

In the Face of Commercial Fraud, Companies are Helpless

A survey of 892 corporate executives around the world found that the most common cause of the increased risk of commercial fraud was the increase in employee turnover. 30% of respondents said that increasingly sophisticated information technology systems will further increase the risk of business fraud.

"In terms of the specific management of trade secrets, our country's progress is still very fast. However, because the so-called trade secrets are divided into documents as carriers, they are still in the human mind. Individuals living as living bodies have accumulated from childhood. Experience knowledge, as well as experience accumulated in later work, are often difficult to distinguish between the two,” said Zhao Guohong, secretary-general of the China Intellectual Property Research Association.

Similar to Xinfu Pharmaceutical's commercial “spy war” infringing on the infringement of the new pharmaceutical industry, and its extension to the legal battle that you came to me later, until now waiting for the review of the Supreme People's Court and then checking the results of the hearing. The active response of both sides involves more direct corporate interests.

Wu Hesong, an intellectual property researcher at Jiangsu Xiansheng Pharmaceutical Research Co., Ltd., pointed out that when litigation may bring far more benefits than litigation costs, it is self-evident to choose litigation. Once the patent infringement of Xinfa Pharmaceutical is confirmed, Xinfu Pharmaceutical can not only obtain huge compensation but also eliminate competition and prohibit Xinfa Pharmaceutical from manufacturing and selling D-calcium pantothenate. However, on the other hand, the risks faced by litigation are enormous. If the infringement is not recognized and the patent is declared invalid, then under the temptation of profiteering, more manufacturers will join the D-calcium pantothenate industry. As competition intensifies, profits will become smaller and smaller, and the survival space of enterprises will be severely squeezed.

Long-term, Arduous Task

In Zhao Guohong's view, in the field of intellectual property rights, patent protection is the most powerful, but Chinese companies lack experience in these areas. The knowledge economy is at the forefront of market development, and companies with many intellectual property rights will be strong enough, especially those with many experiences in exercising their rights, which can often be used as a competitive tool. For example, he said: "For example, some transnational monopoly groups often use patents to deal with competitors in developing countries, thereby consolidating their own markets and robbing others of the market, but not allowing other emerging companies to occupy its territory. Many China Enterprises are now eager to innovate and continue to make new attempts, but they need to have a certain level of real work."

"For most companies, commercial fraud protection seems to be slightly less important than the company's pursuit of profit. Coupled with the difficult and time-consuming process of commercial fraud, many companies have voluntarily given up their rights," said one lawyer.

A private entrepreneur said: "Despite the foreign reports, although the figures are very dazzling, these phenomena are not surprising in China. We are also digging other people, the flow of information is normal, and there is basically no way to do this. Control. If you change technology, there may be laws to protect rights, but business information can't be controlled at all."